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Report

21 Nov 2022

Author:
World Benchmarking Alliance

2022 Corporate Human Rights Benchmark shows some progress but finds less than 5% involve affected stakeholders when addressing human rights risks & impacts

World Benchmarking Alliance

"Corporate Human Rights Benchmark 2022 - Insights Report", 21. November 2022

Summary

The Corporate Human Rights Benchmark (CHRB) assessed three sectors in 2022: food and agricultural products (57 companies), ICT manufacturing (43 companies) and automotive manufacturing (29 companies). The revised CHRB methodology devotes more attention to companies’ actual performance, with an integrated focus on the types of stakeholder engagement undertaken at the various stages of a business’ operations. New topics such as business model, strategy, risks and recruitment fees have also been included. The assessment resulted in five key findings (KFs).

Key finding one: Corporate respect for human rights has gained momentum – the stage is set for regulation to speed things up and close gaps of inaction

[...] There is obvious momentum around corporate respect for human rights. Regulatory action could provide the much-needed final push for companies to move more rapidly towards respecting the human rights of all affected stakeholders.

Key finding two: Elevating human rights responsibilities to the board and senior management level appears to be key for better action on human rights due diligence

[...] Our assessment shows a strong positive correlation between companies' scores on assigning board responsibility for human rights as well as responsibility and resources for day-to-day human rights functions, and overall HRDD scores. Out of the companies that improved the most on HRDD, the majority (75%) have a process in place at a board level to discuss and address human rights issues. Conversely, most of the companies that scored zero on HRDD (70%) do not have such a process in place.

Key finding three: Companies need to translate their commitments to stakeholder engagement into meaningful action

In 2020, 66% of companies assessed committed to engage with stakeholders on human rights. Looking at how this plays out in practice this year, we found that 71% of companies scored zero on their approach to engaging with affected stakeholders on a regular basis. Regarding HRDD, almost a quarter of companies described how they engage with affected stakeholders when identifying their human rights risk and impacts. When it comes to grievance mechanisms, 91% of companies did not disclose that they engage with potential or actual users, such as workers and affected communities, on the design, implementation, performance and improvement of their mechanisms.

Key finding four: Companies are taking a hands-off approach to human rights in their supply chains

While many companies place expectations on their suppliers, the vast majority still fail to follow through by supporting them and monitoring progress. When it comes to key human rights risks for the three sectors assessed, such as child and forced labour, land rights, women’s rights and living wages, on average 33% of companies include such issues in supplier codes of conduct and contractual agreements, but only 11% work with suppliers on the topics. An even smaller number (2%) assess how many people are affected by these issues in their supply chains and disclose progress.

Key finding five: In the face of the climate crisis, companies with an effective human rights approach are better equipped to plan for a just transition

We found no correlation between climate and human rights performance. Most companies that demonstrate they are taking action to address climate change, such as low-carbon transition plans and emissions reduction targets, disclose very little, if any, information about how they manage human rights, and vice versa. However, we did find a clear positive correlation between a company’s human rights score and its performance in the 2021 Just Transition Assessment. [...]

Calls to action

  • Companies
    • Focus on board accountability to translate commitments into action
    • Integrate stakeholder engagement in all phases of implementation
    • Establish a process to support and monitor implementation in supply chains
  • Investors
    • Build on the existing momentum
    • Mainstream shareholder advocacy
    • Engage one-on-one with investee companies
    • Use CHRB resources
  • Governments
    • Accelerate mandatory HRDD
    • Harmonise to a higher international standard
  • Civil society and other stakeholders
    • Use CHRB data to advocate stringent legislation, influence company actions, create citizen awareness, help protect people from human rights violations and hold companies accountable

[...]